The IRS recently announced in Notice 2018-85 that the adjusted applicable amount for the Patient-Centered Outcomes Research (PCOR) Fees is $2.45 for policy or plan years ending on or after October 1, 2018, and before October 1, 2019.
The Internal Revenue Service and Social Security Administration announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2019.
The important limits are provided below:
401(k), 403(b) & 457(b) deferrals $19,000
Catch-up 401(k), 403(b) & 457(b) $6,000
415(c) Limit $56,000
Annual Compensation Limit $280,000
HCE Compensation Limit $125,000
Maximum Pension at age 62 $225,000
SIMPLE Deferrals $13,000
SIMPLE Catch-up $3,000
SEP Minimum Compensation $600
Key Employee Limit, Officer Test $180,000
IRAs for individuals age 49 & below $6,000
IRAs for individuals age 50 & above $7,000
Soc. Sec.Taxable Wage Base $132,900
The Trump Administration recently unveiled a proposal that “expands the usability” of tax-free health reimbursement arrangements (HRAs) in direct response to President Trump’s executive order “Promoting Healthcare Choice and Competition Across the United States.” Under the proposed rule, small business would be allowed to use HRA funds to provide offsets for premiums purchased by their employees in the individual market.
Critics of the proposal, however, contend that this could allow employers to push higher-risk employees away from company-sponsored coverage and into individual coverage offered through the Affordable Care Act’s Marketplaces. The Administration says the proposed rule “includes certain safeguards to mitigate the risk that health-based discrimination could increase adverse selection in the individual market.”
Verified on October 10, 2018, the Department of Justice has allowed CVS Health’s acquisition of Aetna to proceed. The $68 billion deal is still subject to state regulatory approvals, many of which have been granted.The acquisition is expected to close in the fourth quarter of this year. The intention of the merger is to improve the consumer health care experience at a lower cost for patients and payors.
The news comes just one month after Aetna agreed to sell its Medicare prescription drug business to WellCare Health Plans, Inc. to alleviate concerns that the merger would harm competition among plans with pharmaceutical coverage for seniors.
According to a recent analysis by The University of Minnesota’s State Health Access Data Assistance Center, employees with employer-sponsored health coverage are paying more in premiums, co-payments, and deductibles than in years’ past. Between 2016 and 2017, the average annual premium rose 4.4 percent, from $267 to $6,368, nearly doubling the increase recorded between 2015 and 2016 at 2.3 percent.
The analysis uses data from the Medical Expenditure Panel Survey to “highlight the experiences of private sector workers with employer-sponsored insurance from 2013 through 2017 at the national level and within the states.” It is noted in the analysis that the financial protection offered by employer-sponsored insurance has steadily declined due to higher deductibles and premiums.
To view the full analysis, click here.
The Trump Administration issued a final rule Wednesday morning regarding short-term plans (or STPs) that is expected to go into effect 60 days from today. The rule will end a policy from the Obama Administration that restricted the length of time for STPs. The final rule restores the maximum duration of STPs to up to 364 days, with the ability to renew for up to 36 months at the carrier’s discretion.
The rule was created in response to an executive order passed by President Trump in October that directed federal agencies to expand the availability of Association Health Plans, short-term policies, and HRAs.
Contact your Cornerstone representative for any additional details.
With concern over the rising costs of prescription drug costs, the Trump Administration’s FY2019 budget proposal includes a proposed 5-part plan that would change several features of the Part D drug benefit.
The following proposals are part of the Administration’s 5-part plan for Part D:
- Share rebates with Part D enrollees
- Change the calculation of “TrOOP”
- Add an out-of-pocket limit to Part D and change reinsurance
- Relax Part D formulary standards
- Eliminate cost sharing for generics for low-income enrollees
Click the link below for more information, or contact your Cornerstone representative today.
The IRS recently released Revenue Procedure 2018-30, which provides the 2019 cost-of-living contribution and coverage adjustments for HSAs, as required under Code Section 223(g). Specifics are below.
Annual HSA Contribution Amounts
- Coverage Levels
Annual Maximum Out-Of-Pocket Limits for HDHP
- Coverage Levels
Annual Minimum Deductible Amount Limits for HDHP
- Coverage Levels
The Treasury Department and the IRS recently decided, “in the best interest of sound and efficient tax administration,” to adjust the 2018 annual HSA contribution limit to $6,900 for eligible individuals with family coverage under an HDHP, per Rev. Proc. 2017-37.
Individuals who receive a distribution from an HSA oF an excess contribution (with earnings) based on the $6,850 deduction limit published in Rev. Proc. 2018-18 may repay the distribution to the HSA and treat the distribution as the result of a mistake of fact due to reasonable cause under Q&A-37 of Notice 2004-50, 2004-2 C.B. 196.
Alternatively, individuals who receive a distribution from an HSA of an excess contribution (with earnings) based on the $6,850 deduction limit published in Rev. Proc. 2018-18 and does not repay the distribution to the HSA may treat the distribution in accordance with section 223(f)(3), which describes the treatment of excess contributions returned before the due date of return. Thus, the excess contribution generally would not be included in gross income under section 223(f)(2) or subject to the 20 percent additional tax under section 223(f)(4), provided the distribution is received on or before the last day prescribed by law (including extensions of time) for filing the individual’s 2018 tax return.
The title of one of my favorite movies, Back to the Future, seems apropos when compared to today’s individual health insurance market. With the Affordable Care Act (ACA) being anything but affordable, many consumers are looking for alternative options to cover themselves and their families. Monthly ACA insurance premiums can cost more than an average mortgage payment so other options have to rise up from the grave to give consumers access to “affordable” health insurance.
Before ACA, we had medical underwriting, we had prescreens, we had limited coverage for maternity, and we had waiting periods on pre-ex. These are many of the reasons the ACA was created—to eliminate screening questions that were seen as unfair to a consumer with medical conditions. Granted, pre-ACA coverage was not the best either, but it was a fraction of the cost of current ACA coverage. Pre-ACA, networks were also much more extensive, with the majority of options today consisting of very limited HMO or EPO choices.
On April 2, 2018, the great state of Iowa made national news in their attempt to create Individual association-style plan offerings. The Iowa Farm Bureau is looking to recreate coverage options that consumers had before the ACA. However, according to a recent Washington Post article, such plans “sponsored by a nonprofit agricultural organization…shall be deemed not to be insurance.” Rates and coverage options have not yet been approved, but it is difficult to believe that there will not be some limitations that will make these plans available only to those on the healthier end of the spectrum.
The Back to the Future opportunity is twofold. On one hand, short-term plans are beginning to resemble pre-ACA coverage. If the laws change and allow short-term back to a nearly annual, renewable contract, this market will explode for the young, invincible, and healthy population.
However, there are tradeoffs with coverage options. Most short-term plans have PPO networks, which are significantly larger than what can be found with ACA plans. On the flip side, the coverage on the short-term plans is not as extensive as one might find in the ACA. Benefits are not as rich from a copay or medication standpoint and short-term plans do not usually cover maternity, which can be an issue for younger families. Anyone with medical conditions or significant health care needs may not qualify for short-term plan offerings, while ACA plans are guarantee issue.
Let’s look at a couple illustrations that show sample price comparisons for 21, 43, and 64-year-old non-smokers with short-term versus ACA options, using Franklin County (Columbus, OH) as the test case. These are the lowest prices available in which the out-of-pocket costs are closely aligned.
|21||$ 84.73||$ 355.47|
|43||$ 106.16||$ 482.38|
|64||$ 284.53||$ 1,066.41|
|*$2500 Deductible, 20% Co-Insurance, $7500 MOOP|
|**$2400 Deductible, 20% Co-Insurance, $7350 MOOP|
A 21-year-old “invincible” can purchase a middle-of-the-road short-term plan for less than their monthly cell phone bill. A similar plan offering in the ACA would compare more closely to their monthly rent or car payment. The ACA plans are averaging four times more costly than short-term coverage options in nearly all age ranges. When you annualize the premium savings for a 64-year-old consumer, you see savings of over $9,000. For those on a fixed or limited income, this is necessary money in their pocket.
When looking at sample family rates of 35, 33, 6, and 4 year olds, the price difference is even more dramatic. ACA rates, without a subsidy, are approaching, and possibly even exceeding, what a family of four would pay for their monthly mortgage and escrow payment. The rate is almost five times more expensive for ACA versus short term.
|35, 33, 6, 4||$ 333.00||$ 1,592.04|
|*$4000 Family Deductible, 20% Co-Insurance, $12,000 Family MOOP|
|**$4000 Family Deductible, 20% Co-Insurance, $14,700 Family MOOP|
With all things being equal, it is difficult to pass up the significant monthly savings of $1,259 dollars for the family of four. Annualized savings amount to more than $15,000.
With short-term medical and association-style options potentially becoming en vogue again, one has to wonder what will become of the ACA. With many national carriers having exited the Marketplace in a majority of states, and many states with only one or two carrier options, it appears the death spiral for ACA is in full effect. Limited competition creates higher rates; higher rates drive the healthy population into alternative options. When the healthy leave the Marketplace, all that remains are those with medical conditions or those who are receiving a substantial subsidy that offsets the majority of their ACA premium.
Consumers will make health care decisions based on how it impacts them the most: their pocket book. If they can qualify medically and achieve premium savings like what is outlined in the above illustrations, more and more will flock to short-term or association-style options, like those being proposed in Iowa and potentially other states in the near future.
Like the late, great Yankee’s catcher Yogi Berra once said, “It’s like deja vu all over again.”
Questions about short-term plans? Contact your Cornerstone representative today to learn more.